Mindtree Q1 net up 6.8%; acquires two firms for Rs 483 cr

By: | Published: July 17, 2015 12:30 AM

Mindtree today posted 6.8 per cent jump in net profit to Rs 138.2 crore in the first quarter of the fiscal and expressed confidence of beating industry body Nasscom's revenue growth target.

Mid-sized IT firm Mindtree today posted 6.8 per cent jump in net profit to Rs 138.2 crore in the first quarter of the fiscal and expressed confidence of beating industry body Nasscom’s revenue growth targets for the year.

The Bengaluru-based firm, which is witnessing strong traction in digital services, also announced that it will acquire two companies Relational Solutions and Bluefin Solutions for a total consideration of over Rs 483 crore.

“We have a great start to the year, driven by multi-year, multi-million dollar deals and strong contract closures. This in fact is the strongest closure in five quarters and we expect Q2 to be better than Q1,” Mindtree CEO and Managing Director Krishnakumar Natarajan told reporters on a conference call.

He added that the company is witnessing strong demand for digital services and there are “tremendous opportunities to partner with clients for their digital transformation initiatives”.

“We have also crossed USD 150 million in revenues this quarter,” he said.

The company’s net profit stood at Rs 129.4 crore in the April-June 2014 period.

Mindtree’s revenues grew 16.3 per cent to Rs 981.6 crore in the quarter under review from Rs 843.5 crore in the year-ago period.

The company will acquire US-based Relational Solutions for USD 10 million (about Rs 63.5 crore) and UK-based Bluefin Solutions for GBP 42.3 million (about Rs 419.6 crore). Both the deals are all-cash transactions.

Relational specialises in offering technology services to the consumer goods industry, while Bluefin offers SAP HANA solutions.

“The consideration (for Relational Solutions) includes an upfront payment of USD 7 million and earn out of USD 3 million payable over the next two years,” it said.

For Bluefin, the consideration includes an upfront payment of GBP 34 million and earn out of GBP 8.3 million payable over the next three years, it added.

In dollar terms, the company’s net profit was at USD 21.8 million, while revenue grew 9.7 per cent to USD 154.9 million.

It added 900 employees during the quarter on a gross basis, taking its total headcount to 14,427 employees as of June 30. Its attrition rate stood at 18.4 per cent.

The company gave revenue hike of about 9 per cent to its offshore employees and 3 per cent to onsite workers in the said quarter, which had an impact of 200 bps on profitability.

The company has announced an interim dividend of 30 per cent (Rs 3 per equity share).

“There is a strong demand story, specially in digital. Both the US and Europe are doing extremely well. We are confident of beating Nasscom’s FY16 target of 14-16 per cent growth,” he said.

Digital business grew at 12.7 per cent quarter-on-quarter, accounting for 34.7 per cent of the revenue in the reported period.

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